QUALITY HIGHLIGHT 9-1 A Bumpy Ride at Boeing

While we have discussed the advantages of alliances and partnering with suppliers, if they are not managed correctly, problems may occur. Consider the case of the Boeing 787 Dreamliner. What was initially viewed as a smooth journey to the Valhalla of energy efficiency and high wizardry, the trip for Boeing has been turbulent, indeed. One of the contributors to Boeings poor performance in this project may be poorly managed outsourcing.

The culture Boeing is deeply ingrained in engineering and design, and has been centrally located in Seattle. With 787, much of its engineering and production were outsourced to a complex supply chain of about 50 suppliers.

According to Tom McCarty, president of the Society of Professional Engineering Employee in Aerospace, Plane-making is best done by a group of engineers and builders working in close proximity without the distractions of language barriers, cultural differences, and bureaucracy. Although this is the expected view of labour unions, international outsourcing is very much a political as well as an operational necessity because more than 80% of Boeings sales are outside of the United States. However, Boeing may have been overly aggressive in outsourcing two-thirds of its production. According to McCarty, Now with the 787, management felt they knew how to outsource the design jobs. Turns out they didnt.

The figure below shows a picture of Boeing 787 subsystems and suppliers. As you can see, this is a large number of suppliers to manage. There is often no playbook that shows the best way to manage such large networks of suppliers. Boeing has acknowledged these problems and the criticism it has received. Boeing CEO Jim McNerney stated, In retrospect, our 787 game plan may have been overly ambitious, incorporating too many firsts all at once-in the application of new technologies, in revolutionary design-and-build processes, and increased global sourcing of engineering and manufacturing content.

Critically discuss this statement in terms of Single sourcing versus Dual sourcing, Supplier evaluation, Supplier certification, Supplier development programs, and Supplier audit. The discussions must relate to Boeing. (25)